PLUS loans open up opportunities

The federal government has released final plans to reform the Federal Direct PLUS Loan Program. Beginning July 1, 2015, a new definition of adverse credit history will allow an estimated 370,000 more students to apply for federal PLUS loans.

PLUS loans are fixed-interest loans distributed to graduate and professional students or to the parents of dependent undergraduates.

To qualify for the loans without an endorser, applicants cannot have an adverse credit history. The current definition of adverse credit history was established in 1994. New reforms adjust that definition for 20 years’ worth of inflation, declaring that any debt less than $2,805 won’t count against applicants.

Historically black colleges led the push for reform, arguing that their student populations were disproportionately affected by reforms following the Great Recession. These reforms disqualified many families with questionable credit histories from applying for PLUS loans — a study by the National Urban League reveals that 65 percent of African-American undergraduates are independent students.

Responding to these factors, Johnny Taylor, president and CEO of the Thurgood Marshall College Fund, argued that the new PLUS loan reforms take effect too late to help many students disqualified by the reforms following the Great Recession.

Despite these objections, we’re excited to hear about the new reforms, as they’ll allow more first-generation and low-income students to attend college. The reforms should require fewer students to independently fund their educations, allowing them to spend more time studying and less time working to pay for school.